Macroeconomics: An introduction Nikolaos Kamaraios BSc,MSc,Ph.D Candidate Pitikaris Theodoros BAB, BSc,MSc,Ph.

D candidate

Macroeconomics refer to the area of Science of Economics that study the economy as a whole, paying special attention to indicators and related economic policies concerning growth, employment levels, general prices levels, monetary policies, general income, trade gap, balance of payments and other factors that influence economy as an entity(conomiste). In addition they develop models trying to explain the relationship between factors such as national income, output, consumption, unemployment, inflation, savings, investment, trader gap, international trade and international finance (O. J. Blanchard 1998). Within all these concepts and variables, there are three topics that stand out: output, unemployment, and inflation. These topics are also extremely important to all economic agents including workers, consumers, and producers. Throughout economic history many schools of macroeconomic though have been developed, each approaching and arguing over the problems encountered in a different way. These schools of thought are not always in direct competition with one another, even though they sometimes reach differing conclusions. The main schools of macroeconomic thought are as follows: Keynesian economics, which focuses on aggregate demand to explain levels of unemployment and the business cycle. That is, business cycle fluctuations should be reduced main through fiscal policy and monetary policy (Keynes 2006). Monetarism, led by Milton Friedman, which holds that inflation is always and everywhere a monetary phenomenon. It rejects fiscal policy because it leads to "crowding out" of the private sector (M.Friedman 1962; Friedman 1986). Post-Keynesian economics represents a dissent from mainstream Keynesian economics, emphasizing the role of uncertainty and the historical process in macroeconomics New classical economics, explores the implications of rational expectations. This school asserts that does not make sense to claim that the economy at any time might be "outof-equilibrium". Fluctuations in aggregate variables follow from the individuals in the society continuously re-optimizing as new information of the state of the world is revealed(Yeager 1997). New Keynesian economics, developed partly in response to new classical economics. It strives to provide microeconomic foundations to Keynesian economics by showing how imperfect markets can justify demand management (Gordon 1990).

Supply-side economics delineates quite clearly the roles of monetary policy and fiscal policy. The focus for monetary policy should be purely on the price of money as determined by the supply of money and the demand for money. It advocates a monetary policy that directly targets the value of money and does not target interest rates at all. The value of money is measured by reference (i.e. gold). The focus of fiscal policy is to raise revenue for worthy government investments with a clear recognition of the impact that taxation has on domestic trade (Moore 2008). Austrian macroeconomics presents another laissez-faire school of macroeconomics. It focuses on the business cycle that arises from government or central-bank interference that leads to deviations from the natural rate of interest (Cordato and Armentano 1992).

Economy has a quiet dynamic nature furthermore the imperfect distribution of information prevents the constitution of perfect competition markets and increases the uncertainty over middle term and long term macroeconomic forecasts (Nobel Prize 2002) . The aforesaid theories are employed to project the status of Economy as whole, in order to assist markets and governments towards the optimization of their financial planning.
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